Hire Purchase Car Finance

Your ultimate guide to understanding HP car finance.

Are You in the Market for a New Car but Don’t Have the Funds to Pay for it Outright?

If so, you may have come across the term “Hire Purchase” while researching car finance options. Essentially, Hire Purchase is a type of financing that allows you to spread the cost of your new car over a set period of time, usually between one and five years. It’s a popular choice for those looking to buy a new or used car, and it can offer several advantages over other forms of finance.

In this page, we’ll explain everything you need to know about Hire Purchase agreements, including how they work, their benefits, risks, and key differences between Hire Purchase and other financing options. So, whether you’re a first-time car buyer or a seasoned pro, read on to find out if Hire Purchase is the right choice for you.

An image of a phone showing the Marsh Finance website explaining how Hire Purchase works.

Benefits of Hire Purchase


Hire purchase agreements allow you to spread the cost of your car over a set period, making it more affordable than paying for the car outright.


With hire purchase, you have the flexibility to choose your deposit amount, the length of your repayment period, and your monthly payments.


Unlike leasing agreements, with hire purchase, you own the car outright once you’ve made your final payment.

What happens at the End of a Hire Purchase agreement?

You’ve made it to the end of your Hire Purchase agreement. Now what? Well, once you’ve made all the repayments, the car is officially yours to keep. This means you can sell it, trade it in, or use it as collateral for another loan. You’ll also receive a “statement of title” from Marsh Finance, or your chosen finance lender, which proves that you’re the legal owner of the car.

Hire Purchase vs Personal Contract Purchase

Car Ownership at the End of Your Agreement

Fixed Monthly Payments

Final Balloon Payment

Avoid Excess Mileage Charge

Secured Against an Asset (e.g. a car)

Support With Vehicle Issues

Requires Initial Deposit






The Importance of Deposits in Hire Purchase Agreements

In Hire Purchase agreements, the deposit you pay upfront is important. The larger the deposit, the lower your monthly payments will be, as it reduces the amount that you need to borrow. Having a larger deposit can also help you secure a better interest rate.

Pros and Cons of Hire Purchase: Is it the Right Choice for You?

Advantages of Hire Purchase Car Finance:

  • Affordable way to finance a car.
  • Flexible repayment options that can be tailored to your budget and needs.
  • Low initial deposit can help make the car more accessible.
  • Fixed interest rates provide stability and predictability for budgeting.
  • Ownership of the car at the end of the agreement.
  • No mileage or usage restrictions as you own the car during the agreement.
  • Can help build credit history and improve credit score through regular repayments.
Disadvantages of Hire Purchase Car Finance:
  • If you miss payments, your credit score can be negatively affected, and the car can be repossessed.
  • You’re tied to the car for the duration of the agreement and may have to pay early settlement fees if you want to end it early.
  • You don’t own the car until you’ve made all the repayments, so you’re unable to sell the vehicle until you’ve paid off your agreement.
  • No large balloon payment at the end of your agreement, as there would be with a PCP agreement.
  • Not suitable for short-term car ownership or if you plan to change your car frequently.

Car Finance FAQs

Am I eligible for Hire Purchase car finance?

When you apply for car finance, your lender will need to conduct credit and eligibility checks to determine whether you qualify for a finance agreement. To complete the application process, you’ll need to provide proof of key information, such as your age (all applicants must be aged 18 years or over), address, earnings, employment status, and a full or provisional valid UK driving licence.

Here at Marsh Finance, we have certain criteria that a vehicle must meet before we can finance it, such as its age, mileage, price, and condition. We believe in helping as many people as possible to own their dream car, so even if you have a low credit score, it’s still worth checking to see what options are available to you. Did you know that it only takes 30 seconds to submit an application with Marsh Finance? You’ll receive a decision on the same day, without impacting your credit score.

Don’t let a less-than-perfect credit score stop you from getting the car you want. Apply for car finance with Marsh Finance today and let us help you hit the road!

Does applying for car finance affect my credit score?

The good news is that when you apply for car finance with Marsh Finance, it won’t have an impact on your credit score. We only conduct a ‘soft credit check’ when you apply, which won’t be visible to other lenders. This means that your credit score won’t be affected by the application process.

The application itself is super quick, taking only 30 seconds to complete. And the best part? You’ll find out if you’re pre-approved on the same day! Apply now.

It’s important to note that we will conduct a ‘hard credit search’ when you sign the contract and finance agreement. This will show as a hard search on your credit report, but we’ll be sure to let you know beforehand.

Check if you’re approved for car finance now without impacting your credit score.

Do I need a good credit score to apply for car finance?

Not necessarily! While having a good credit score can certainly make it easier to get approved for car finance, there are lenders out there who are willing to work with borrowers who have a poor credit history. Even if your credit score isn’t great, you still have options available to you. With a little bit of effort, you could be driving away in your new car in no time!

It only takes 30 seconds to submit a car finance application with Marsh, you’ll receive a decision on the same day, without impacting your credit score.